Eu financial ministers to open discussions about exit strategy

Next Tuesday, 10 November, EU finance ministers are to meet to discuss the sustainability of public finances, the principles for phasing out support to the financial sector and a number of tax issues.

Owing to the economic and financial crisis – which started a little over a year ago – public finances in EU Member States have deteriorated sharply. The rapid ageing of population is another factor that will contribute to rising costs in a number of areas. The finance ministers will adopt conclusions based on the Commission’s recently published Sustainability Report on the long-term sustainability of public finances in EU Member States. The conclusions will emphasise the measures necessary to reverse the negative trend in public finances. The Commission points to three areas – reducing the budget deficit and debt levels, increasing employment and reforming the welfare systems.

When the financial crisis hit, governments in EU Member States took a number of measures (such as guarantee schemes, public funds to support banks and more) to safeguard stability in the financial markets. Even though it is too early to phase these programs out, it is nevertheless time for Member States to start discussing the issue. The finance ministers will therefore have a first discussion on the phase-out principles and agree on the process going forward.

How? Well, 2009 is the European Union Creativity Year, but politicians as a rule and finance ministers in particular are not known to be addicted to fantasy and creativity: it might be just an fortuitous accident, but we cannot help noting the second point in the 10 November meeting agenda is tax.

EU finance ministers will discuss several tax proposals. Regarding proposed revisions to the Tobacco Tax Directive, finance ministers will agree on structures and tax rates for the excise duties on tobacco products. The proposal gives Member States more leeway in applying a tax per item and charging a minimum rate for the excise duty on cigarettes to achieve health objectives

Why discuss about taxes? Well, States have poured quite a lot of money into the financial and banking systems, they will be wanting to get it back and guess who is going to pay the bill. No matter if, in change for these flows of public money into private wallets – though with the necessity to save jobs -, States have raised their control of economy.